Lets look at various common credit card processing terms. As a merchant offering credit card payments, its imperative that you understand the lingo associated with the process.
Acquirer or Acquiring Bank – The institution or organization that processes credit cards payments for a merchant that accepts credit cards in return for goods and services.
Authentication – Identification of individuals and businesses through the use of digital certificates.
Authorization – The process, where it is checked if the amount of funds required for transaction, are available or not.
AVS – Address Verification System – The process where cardholders address is validated against the records of credit card issuer. The process helps in establishing the legitimacy of the cardholder and prevents fraud.
Account Number – A unique number assigned to the cardholder that serves as a unique identity.
Batch – A group of credit card transactions that have to be settled with the merchants acquiring financial institution.
Card Not Present – When the card is not present during the transaction like in case of mail order, it is termed as Card not present transaction.
Card Present Account – A transaction where the consumer and the card are required to be present at the same location.
Cardholder – The person who holds the credit card or a business enterprise who is eligible to make a payment by card.
Corporate Card – A Card held by a business unit and is used for covering work related expenses.
Chargeback – Charge back occurs when the credit card holder requests to debit the amount from Merchant account.This mainly occurs when the cardholder is not satisfied with the quality of product/service or on the occurrence of fraud.
Charge back Fees – Are the fees levied in the event of charge back.
Debit Card – Card, which withdraws payments directly from holders banking account to pay the merchant.
Discount Rate – Rates set by a Merchant Bank for offering services. This rate is arrived by taking into consideration the charges of number of factors.
Encryption – The process where data is scrambled and unscrambled when sent over the Internet.
Gateway – An application that accepts order transactions from merchants and sends them.
Interchange – A system managed by Master and Visa to bring global standard in exchanging data and money between banks.
Late Settlement – Fees paid by merchant for late processing of settlement
Third Party Processor – Companies that enter into third party agreements with Issuer and acquirer banks to process settlements.
Transaction – Refers to the purchase or transfer of money through credit card. Transactions are either offline or online in nature, Offline transactions are those that happen at physical establishments.
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